Disney, Time Warner Cable cut deal

Mammoth carriage accord includes digital rights, services

With so many channels to play with, Disney and Time Warner Cable execs were able to move beyond their initial aggressive posturing to craft a mega-carriage deal that gives Disney the fees it demanded for its ABC O&Os and popular cablers, while Time Warner gets a raft of digital rights that will help expand its offerings to subscribers.

Disney described the deal, unveiled Thursday, about 16 hours past the midnight expiration of the previous carriage agreement, as its “most expansive content agreement to date.” Pact is believed to run at least six years.

Disney and Time Warner Cable execs worked round-the-clock for the past three days, mostly at TWC’s Gotham headquarters, to finalize the contract that covers ESPN, Disney Channel, ABC Family and all of their offshoots, as well as four ABC O&Os in TWC markets, including WABC-TV New York and KABC-TV Los Angeles.

The retransmission consent coin for the ABC O&Os, also encompassing stations in Raleigh-Durham, N.C., and Toledo, Ohio, was initially a contentious point in the talks. Deal is said to have settled out a fee of about 40¢-50¢ per subscriber per month for each station, with escalators that hike the fee over the term of the deal. That’s comparable to the deal that the Fox station group struck with Time Warner Cable after a big retrans showdown over the New Year’s holiday, though industry observers speculated that ABC probably fetched a little less than the Fox O&Os because the ABC stations do not have any NFL games, as the Fox stations do.

The omnibus carriage renewal also marks the first time that the Mouse has had the chance to renegotiate with TWC, the nation’s second largest cable operator behind Comcast, since Disney Channel and ABC Family have exploded with the tween and young adult auds. That gave Disney a lot of leverage at the negotiating table.

That the sides were able to avoid a shutdown of services while the contract wrangling continued bodes well for other broadcast and cable retrans negotiations to come. Fox set the get-tough tone in its negotiations with Time Warner Cable, which narrowly averted a New Year’s Day blackout. Disney did wind up yanking WABC-TV’s signal from Cablevision’s systems in a retrans wrangle that unfolded March 7, the day of ABC’s Oscarcast.

The heightened tension between broadcasters and cable operators has spilled over into Washington, where the sides are battling on proposed changes to the nearly 20-year old retrans consent laws. TWC’s deal with Disney, like it’s earlier agreement with Fox, indicates that cablers are resigned to having to fork over significant coin for the first time for the right to carry local Big Four affiliate stations.

But to get more money for its traditional channels, the Mouse had to fork over a lot of rights on the digital and video-on-demand side.

Among the major points of the pact for TWC is that ESPN, ESPN2 and ESPNU channels will be made available for broadband viewing by TWC subscribers through the cabler’s TV Everywhere service, which is still in test phase but should be ready to roll out by year’s end. The inclusion of sports programming in a broadband service that can be viewed by TWC subscribers (on a password-protected basis) on computers, iPads and other mobile devices, is seen as a key to drawing viewers’ interest in the broadband service.

TWC also succeeded in prodding Disney to modify its business terms for its ESPN3.com broadband service. The Mouse had sought a pricey fee structure based on the number of high-speed Internet users that TWC had. Now ESPN3.com will be available to all TWC subscribers that take ESPN.

The pact also vastly expands the volume of Disney and ABC programming to be made available through TWC’s On Demand platforms. In an effort to help TWC compete with the likes of Netflix and iTunes, the Mouse will also create a pay-per-title video-on-demand service featuring library programming from the ABC and Disney vaults. There will also be a subscription VOD “Disney Family Movies” service.

ESPN and TWC have agreed to partner on a special highlights channel, ESPN Goal Line, that will run once a week to offer highlights and rundown of college football games. During college basketball season, the channel will be dubbed ESPN Buzzer Beater. The services may be picked up by other cablers and satcasters, but for now, TWC will be the exclusive provider of ESPN Goal Line, which is due to bow on Saturday.

In a statement, Disney Media Networks co-toppers Anne Sweeney and George Bodenheimer said the deal “demonstrates our commitment to our distribution partners and our ability to work with them to provide consumers with an unmatched portfolio of national and local entertainment, news and sports content.” TWC chief Glenn Britt said they were gratified to have “reached an agreement without any interruption in service.”

The talks took up most of the summer for a small army of Disney and TWC execs, led for the Mouse House by Ben Pyne, prexy of global distribution for Disney Media Networks, and Sean Bratches, exec veep of sales and marketing for ESPN; and for TWC by Britt and programming prexy Melinda Witmer.

The deal covers about 16.4 million cable subscribers: 14 million served by Time Warner Cable and another 2.4 million by Bright House Networks (for which TWC is the bargaining agent).

Among other key components, TWC has agreed to add new channels from Disney to its linear lineup, including Disney Junior, the preschool channel that will take over the existing SoapNet outlet in 2012; the fledging ESPN 3D (which is not yet a 24/7 outlet); and ESPN Deportes HD.